Thursday, December 22, 2011

There is a lot of anger now with SMRT CEO Saw Paik Hwa and there are calls for her to resign. The Chinese tabloids fed the fury of the readers by publishing a photo of her dressed as Cleopetra carried by a few half naked men. She did that to raise money for charity but it doesn't matter - people are just angry and they will find reasons to be angry. Our MRT trains are 25 years old. Things breakdown due to wear and tear....and in an unpredictable fashion and perhaps maintenance cost have to escalate as the trains age but privatisation means a great pressure to increase profits and answer to shareholders.

SMRT's profits rose every year even as the quality of service fell due to overcrowding. Its CEO Saw received the highest pay package of any CEO in SMRT's history. Profits vs quality of service. High salaries does not mean the system delivers quality of service to the people and system reliability. But you think hard about what is happening at a larger entity better known as Singapore Inc. For years the leaders are paid record salaries pegged to GDP growth while the quality of life of the people declined. The system put in place in Singapore Inc to maximize GDP growth is headed for a breakdown like the MRT. Just like the unhappiness caused by deteriorating quality of service and overcrowding of trains, the unhappiness with Singapore Inc system has been rising...and an increasing number feel that change is badly needed and things are heading for a breakdown.

Here is the highly respected professor Robert Shiller explaining the dangers of the income gap and some ideas on how to maintain stability in an socio-economic system.

A few things to note about Professor Shiller. A few years ago, he became famous for coming up with the phrase "irrational exuberance" to describe the Nasdaq bubble and warned about its collapse. He also warned us about the US housing bubble and his index the Case-Shiller Index is now the most widely tracked index for housing prices in US. Professor Shiller research field is in behaviorial finance and when his conclusions are based on scientific evidence and his understanding of human behavior devoid of politics and ideological bias. He tells us simply that unless the income inequality is addressed, there will be instability in the economc system and our society. This video was made in Aug 2009....1.5 years later we see social instability around the world - the Arab Spring, protests in Israel, Occupy Wall Street movement etc. While there may be other issues like democracy and human rights involved, the common denominator in these protests is social inequality.

I explained in numerous postings that income inequality is one of the root causes of economic problems we see in the past few years. When wealth is unequally distributed, there is fall in aggregate demand which is usually compensated by increase of debt which then become the cause of crisis be it subprime debt in the financial crisis or the ongoing european sovereign debt crisis. Even if we stabilise these crisis in the short term, the current economic model is still not sustainable until the income gap narrows.

Income inequality we are seeing today has only been seen in the last 100 years on the eve of the Great Depression. It took a depression followed by a World War in the 1940s, to compress the income gap.

In Singapore, we have the biggest income gap among developed countries. There has not been a single protest in Singapore because we have very harsh laws - there has been no large scale protests in Singapore and Singaporeans over time have been conditioned not to participate in one. The lack of protest does mean there is no unhappiness or instability in our system. In fact, without a escape valve it the whole situation can be very dangerous. Leaders underestimate the problems and pressures build up. If you look at authoritarian states e.g Egypt, Syria and semi-authoritarian state e.g Russia you see complete calm 3 months before that there have been no major protests for decades and when trouble erupts regime change takes place. In places where people protest regularly like Israel, the system stayed intact because the govt there is forced to always adjust to avoid complete collapse. The strongest signal that something is not right is during the General Elections when Singaporeans feel some safety in numbers and turn up for rallies. After that things look calm again and you can't tell whether people are now happy with the policy tweaks, some downward ajustment of minister salaries and various measures to cool the property market, provide more beds in hospital, increase ComCare + Workfare etc. The superficial calm probably leads the PAP govt to think sufficient is done, they have "bent over backwards" .....people can see the PAP system generally works and the few glitches fixed, the PR improved...and then they fall back into the thinking that the PAP is after all the fantastic govt that took this iny country from t 3rd world to 1st world, people can be wildly successful because of social mobility and understand Singapore is a resource-less state so citizens have to right-size their ezpectations. The PAP looks like they are thinking along these lines based on the pace of change they are implementing. This is a gross underestimation of the inequality problem and will lead not just to election disaster for the PAP in 2016 but deep social problems for Singapore in the coming years. Our system is not generally okay - like those MRT trains that have been breaking down, our healthcare, retirement systen, education, housing ....all need major revamp due to the income inequality....they are all falling apart under the strain of income inequality.

The PAP govt has allowed the income gap to rise for too long and to grow too big to still maintain schemes that is consistent with its self-reliance philosophy. Take CPF as an example. If income gap is small, it makes a lot of sense to ask everyone to take care of their own retirment through CPF saving - you spend your own money. With the large income gap it means that that a large segment of the workforce will not be able to save enough for a proper retirement and many who can retire will not have a good quality of life. Even without all the modification to use CPF for children's education, housing and as loans to GIC for reserve building that drain off CPF funds, the basic schemes becomes inadequate because of the income gap, many in the lower income brackets cannot accumulate the minimum sum. The PAP solution is to keep pushing back withdrawal age in effect forcing aged people to take up menial work because most of the time that is the only work available to old folks. For a country with a reputation of being an affluent, tourists are sometimes shock when they see very old folks cleaning tables for a living. Our income gap means that in the coming years more people will have to retire later and the situation will worsen. The lack of shared responsibility for retirement at a time when income gap is so high makes it a hard buy-in for ordinary Singaporeans who work under intense competition from foreigners, depressed wages and cannot make it to a proper retirement. This is a mismatch with the level of commitment the state demands from its citizens in the form of conscription plus reservist duties and unequal sharing of responsibility. The implementation of CPF Life, increasing withdrawal age and restricting access to CPF through minimum sum rules is pushing and stretching the system that is already on its way to a breakdown in terms of its goal as a provident fund to deliver a decent quality of life to retirees....

What about our healthcare system? Stretched capacities, insufficient beds at public hospitals as the govt tries to turn healthcare into a profit generation center by turning Singapore into a medical hub for the rich in the region. Rising profits in healthcare sector, overcrowded public hospitals, rising fees....doesn't that start to look like the MRT system? You pay more, quality drops due to overcrowding, record profit is made ...and Singaporeans are worse off every year.

Our economic growth model which now depends on increasing the foreign influx to increase the GDP....how is this going to be sustained? We rapidly reached the highest population density in the world. Housing cost and the cost of living has shot up at the same time our income gap rose to the highest among developed countries. We are starting to see a rise in poverty, a growing underclass and the stresses in the system is building up....but we are caught in a vicious cycle because we are now depended on this model having neglected productivity for too long. Are we not heading for a breakdown here?

When the system is old, you sometimes have to revamp it...do an overhaul or you have to spend large amounts on maintenance to ensure it does not break down. You cannot keep pressing on and pushing the system along to keep it going so that your profits and GDP keep going up. Things can deteriorate rapidly and when the unhappy people who have been waiting for improvements see that trust is completely lost and nothing you do after that matters because they will never trust you anymore.

CEO Saw has all the profits generated over the years made from the pockets of ordinary Singaporeans. She had the choice to spend it to overhaul the system to reduce the risk of breakdown and failure but she is also the CEO of a listed company and shareholders demand profits to be paid out as dividends. Singapore as Singapore Inc faces a similar conflict - its success is measured primarily in terms of GDP growth leading to policies that benefit only big businesses. Our society is one now strained by rising income gap, falling quality of life and breakdown of trust between the govt and the people. If we don't bury the notion of Singapore Inc and bring back Singapore the nation and revamp the systems to deliver benefit to the people and long term sustainability ....this whole Singapore Inc system will breakdown like the MRT system...and people will be demanding leadership change at the top.

56 comments:

Well said, Lucky. Even in my company where our D&D have lucky draws, being a small company, workers are also disgrunted when management participate and help themselves to lucky draw cash prizes which is peanuts to them but may amount to more than half a month take home salary for most workers. The rich get richer and they don't care if they get peanuts, which may mean alot to peasants. Income gap must be address...even in a company.

I agree with you, Lucky. But try to argue with those in power and when they kenna cornered, they start calling your idea about income disparity socialism. The rightwing in the US is doing the same to Obama. In the past, the middle class can rise to upper class (if they work hard, have good business ideas etc), in any countries with huge income disparities, the gap between middle class and is now so great, it is harder to do this.This Saw Piak Hwa - did anyone check her background in running large corporations? Nationality aside, what has she done to make her qualified to be CEO?

While me agrees with Lucky that the situation and its'implications are as real as had written here; the SMRT Incidents and the Way it is managed SHOULD NOT BE CONFLATED with the Governance of the State.

SMRT is about transportation for the masses(Public transportation), the safety and reliability of its service and the maintenance of the System for efficient services and safety. IT IS RUN AS A COMMERCIAL ENTITY NOW.

A government is to maintain Law and Order and to do it's utmost to protect its' people and to make them happy. NO GOVERNMENT SHOULD BE RUN AS A COMMERCIAL ENTITY.

Lucky seemed to suspect that unhappiness with Ms Saw PH is much due to envy of her remuneration. There could be some contributing cause, BUT, it will not be so if the service of SMRT is satisfactory or better. The grouse against Ms Saw is more likely to be the constant increase in fare.

The Cited Incident of Ms Saw doig charity show is most unwarranted. Ms Saw can participate in as many Gala Events as she wants and appears in exclusive fashion magazines and periodicals. SO LONG AS SMRT CAN PROVIDE GOOD AND SAFE SERVICE, no one with ever be bother with whatever MS Saw PH.

Somehow, me has to believe some netizrns who suspect that bloggers maybe fraternity of the ELITES.

I think people are reading too much into the breakdown. It's a breakdown of the MRT, not the Singapore government. Seriously, I fail to see how a breakdown of the MRT got anything to do with the income gap. Sorry Lucky but I think you are over-reaching here.

It is definitely a breakdown of management. The hot GE issues were housing and transport. Look at what happened to the 2 clowns in charge. They had it coming, choosing to ignore general feedback and instead, throw statistics to hide their ineptness. The frightening thing is that the person in charge of these essential services/CEOs would rather keep quiet and let the unhappiness simmer until it boiled over. Wonder who are the frogs being boiled?

When 2016 approaching, PAPAYA will try all means to make the mass population as "happy" as ever. Meanwhile, our opposition parties are still too many, too scatter to form the next effective GOV. So PAPAYA will still be in POWER. Maybe LSL will still try and says,"We are sorry, the people is the real master, we are only the servants(who rob you of the country's wealth).There you see, it's back to square one. Because it's not for nothing Sinkees are called daft by LKY. he knows we are really the 4Ks people.

Singapore is DOOM. The systems are rotten at the core. All the signs of overindulgence by the ruling elites and the wealthy are everywhere. History has shown that these are the signs of a society rotten to the core. The country has lost its' way. The top leaderships are out of touch and have lost their moral decency and authority. Moral decay is everywhere. Just open your eyes and u see it. Smart ones will have another leg up somewhere else. Poor and stupid ones are stucked in a sinking ship.

"You pay more, quality drops due to overcrowding, record profit is made ...and Singaporeans are worse off every year.

Our economic growth model which now depends on increasing the foreign influx to increase the GDP..."is clearly for the benefit of the privileged. Lesser mortals have been reduced to serfdom bereft of healthcare and retirement. Work till you drop or relocate to old age home or hospice in JB or anywhere and free up space for another FT. Growth (higher GDP) for those who own Singapore Inc. with more imports of serfs to feed the growth.

Why is Saw given so much credit for the profit increase in SMRT?Influx of FTs - automatic increase in ridership.Regularly get approval for fare increase for any crap reasons- can any private sector do this?.Prime retail biz space to rent out at MRT stations - who else has such privilege ?So put anyone there, profit will also increase by leaps n bounds.How much has her salary increased over the last decade in % ? Has her responsibilites increased by the same % -of course not!Salary increase for all the top people in GLCs - S'Tel,Capitaland, etc - all out of this world.Yet Ministers ask hawkers not to raise their prices ? Despicable!

It did not bring in many jobs for SingaporeansIt does not pay very wellIt provided opportunities only for limited group of people.

Instead, over the last 8 years or more, there was great success in property markets, financial products, building construction and oil riggs.

Construction and oil riggs benefitted people with strong legs and arm power..people without polytechnic diplomas and degrees

Financial products and properties benefitted people with money. Something most Sinaporeans did not have.

No improvements to the software which is the people.No improvements to incomes and jobsNo improvements to skills either.

Talk about the knowledge economy was talk only.. the result was a couple of casinos and large skyscrappers.. filled with foreigners.. The singaporean continued to drive taxis, be property salesman, insuarnce scammers and stock traders.

Zero productivityZero innovationZero economic benefit to all

Good cosmetics though.. beautiful landscape at the Marina.. but whose pet project is that?Did you get money out of it?or did you have to pay to get in?

This is my home.This is the home my father builtYeah right... but I am jobless.

Sure, I can drive a taxiSure, I can be a property agentSure, I can sell insuranceSure, I can be an Allied EducatorSure, I can trade on lineI could also be a production operator at Biosensors's factory.

As expected the resident apologists have rushed forward to insist that since the FAP carried the majority of a rigged vote there is absolutely nothing to fear and Professor Shiller is a damned fool with a hidden agenda to do us down. What could possibly go wrong in Wonderland?

What we should be pleased about is that the regime is hell-bent on plastering over the cracks and making the minimum of concessions to the great unwashed because the servants of Napoleon too have been conditioned to think they can do no wrong. If they were capable of admitting fault with even the slightest bit of sincerity we should never be rid of them. Therein lies our salvation and the fatal blunder of every surprised and shocked despot as he tumbles arse-over-tit into the dustbin of history.

Gadaffi's pathetic last words as he was dragged out by his hair from his bolt-hole in a sewage pipe were, "Eh, what...what's going on?"

20 years ago, in many facets of sg life, eg. transport, healthcare, etc, we were head-and-shoulders above the rest of the world. At that time, being the best in many areas, we were actually PROUD to be Singaporeans.

Fast forward 20 years, and we see a significant drop in living standards.

Dont be fooled by the marketing term "World Class" this-and-that.

Being world class now means we've DROPPED from out peak and are back into mediocrity.

Lucky u r spot on. It is good that u brought to attention the pap system which demands so much from Singaporeans and yet when it comes to the crunch fails them. LKY n his pap have made SUCKERS out of Singaporeans. R u prepared to tolerant this any further ?

even though I find that your argument is a bit over reaching yet at its core I understand what you are trying to bring across.

There is a sense that something is starting to go wrong with our beloved country. All the recent events are symptoms of a larger issue yet some ppl are afraid to confront it.. is the ruling govt starting to lose its shine.. is the whiter then white starting to fade..

Whats gonna happen to the country when things start to unravel, will lky be around to save the country from plunging into the abyss of cronyism and social inertia, the implication of such a thought is scary.

I dont think that many Singaporeans are mentally ready and able to deal with such a situation

A signalling fault today cause delay again. So many problems. It is now very clear this ugly Cleopatra squeezed maintenace costs in order to drive up profit. Reports of using reconditioned old parts for repairs is just one of the bad practice in SMRT. Shackling of employees is another. She is lining her own pockets at the expense of safety of commuters. This is totally unacceptable. The whole board has been compliant and negligent in looking after the safety of commuters. Time for major change at SMRT.

One central theme which runs across the political economy of Singapore is the retention of power and control. Unfortunately, there is the nasty details called the GATT rules at the WTO, of which Singapore is a member and has to play ball. Seehttp://www.wto.org/english/thewto_e/acc_e/cbt_course_e/c5s2p3_e.htm .

Hence we see the real reason for and how the PAP government refines the art of continual corportisation, Temasekalization, divestiture while retaining the essential power and control.

It is also recognized early that one requires a sizeable network to conduct nepotism and cronynism to project that power and control. The real spoiler is that the cronies are not up to par in many areas, massive LOSSES ensue (it's all real money and our money) and holes need to be filled.

With that bit of shit hitting the fan in the case of SMRT, we catch a glimpse of the actual failings. With corners cut, the regulator remains compliant (really not the other way around), it is not difficult to amass profits for the Mother Ship.

But seriously, who in the right mind cuts maintenance where emergent problems become immediately obvious? That's sub-par, even for cronies. In the case of SMRT, it is reckless disregard for human lives. THIS HAS GOT TO STOP!

How can Ong Ye Kung, the defeated pap candidate for Aljunied be an independent director of SMRT which is controlled by Temasek? The pap is abusing this SMRT fiasco to gain mileage for Ong Ye Kung in the next election. I hope some opposition raises this to highlight to Singaporeans the extend of collusion in the pap system.

Money politics are played by the PAP regime in almost every economic and social activity in Singapore.With taxpayers money,they buy up people ,their loyalty and their souls.To the 60pecent PAP voters,I have two words for them,Thank You.

Money politics are played by the PAP regime in almost every economic and social activity in Singapore.With taxpayers money,they buy up people ,their loyalty and their souls.To the 60pecent PAP voters,I have two words for them,Thank You.

Quote: 'How can Ong Ye Kung, the defeated pap candidate for Aljunied be an independent director of SMRT which is controlled by Temasek? The pap is abusing this SMRT fiasco to gain mileage for Ong Ye Kung in the next election. I hope some opposition raises this to highlight to Singaporeans the extend of collusion in the pap system.'

Ong Ye Kung is now appointed to do a screening of information and finding before reaching COI. One wonders why there is a need to appoint Ong to be independent probe on SMRT if the government is to appoint an independent COI to investigate the matter. Ong has be civil servant before and knows very well Official Secret Act. His wife is related to SIM LIM that built the most expensive HDB flats and inflated the HDB flat prices. Another ANUS associate professor is a director to both HDB and SIM LIM during the SIM LIM's contract case. So much is the independent COI and SMRT probe.

Do you really expect accountability and transparency from a government that is never accountable and never transparent at all? Uniquely Singapore! Lots of wayang indeed.

If LKY and his pap had not been abusing their power to manipulate the systems to oppress, suppress and frighten Singaporeans, they would have been voted out long time ago.So the election results in Singapore are not a good reflection of the wishes of Singaporeans. When Singaporeans are forced to vote with a gun held to their head, it is amazing that as much as 40% are prepared to die in order to regain their freedom and land.

A genuinely independent director must be someone who has not connections or interests in and to the company or the major shareholders at all.Ong Ye Kung being a pap man is definitely not independent on the board of SMRT.The culture of the Singapore system as crafted by LKY is one of u scratch my back and I scratch yours. That is one reason why the system is rotten to the core and will eventually collapsed. We can already see that the system failed miserably in a crisis situaion.

if we have natural resources eg vegetation, livestocks..etc.. our income inequality will reduce or our level of living will improve. for me .. i think so.. cos we all have work that is to come rather than relying on companies or govt to create jobs for us..

Only 25 years old and the MRT system is already breaking down. I dread to thnk in another 25 years what it will be like with buildings, lifts, bridges, highways and other infrastructure breaking down as well. The only hope is that Singapore Inc would have collapsed by then and a real nation has risen in its place. A nation that takes care of its people as well as its infrastructure.

i fear that the MRT breakdown will be attributed eventually to aging system and the need for more maintenance. It seems that the top management of SMRT will get off without having to shoulder any blame for the breakdown.

We need operationally competent management to run the transport system. A look at SMRT management showed that many of them come from non-operational or transport related industries like DFS etc. Just look at the ineptness of how they handled the situations in term of PR and communication make me very worried if they continue in their roles.

Ask yourself why they need more than one hour to release a statement that the train system is down?

So I feel the government must seriously think about not only the cause of the recent breakdowns but putting the right people to run the transport system which has such a huge impact on the people and economy.

"So I feel the government must seriously think about not only the cause of the recent breakdowns but putting the right people to run the transport system which has such a huge impact on the people and economy."Anon 23/12/11 16:28

The right people are those who are the best available.

In the kingdom of the blind, the one eye jacks are the best available people.

The state media has resorted to using unfortunate figureheads in trouble as relief valves for social frustration recently. Saw Phaik Wah has is the current flavour of the month. Before that was the PUB management due to the floods. Before that was Mah Bow Tan et al (which is akin to cannibalism -- eating your own kind). Methinks a lot of bigwigs are now quaking in their boots and watching their steps.

Congrats on this article. The perspective of comparing the current inequality to that in 1929 is a thunderbolt.

Lucky, I like your analysis and agree with it. But whilst we wait another 4 years before we get close to changing the government, what would you say, are short term steps we can aspire to, to correct the present situation?